Technical View - April 20, 2021 - Mr. Nagaraj Shetti, Technical Research Analyst, HDFC Securities
(Time Zone: UTC)
After showing a sharp weakness on Monday, Nifty witnessed lack of strength to sustain the intraday highs on Tuesday, it witnessed high volatility and finally closed the day lower by 63 points. Nifty opened on an upside gap of 169 points and started to show intraday weakness from the day's high since opening. The weakness got intensified in the mid to later part and Nifty able to show minor upside recovery from near the support of 14200 towards the end.
A long bear candle was formed on the daily chart with minor lower shadow. Technically, this pattern could mean a possibility of sharp downside breakout of the crucial lower support of 14200 levels. The opening upside gap of Tuesday has been filled completely and the opening downside gap of Monday has been partially filled (left by small margin).
The Nifty has been showing lack of strength to sustain the highs recently and we observe a formation of consistent lower highs and repeated testing of lower 14200 supports. After showing upside bounces from the lower supports for few occasions, Nifty is now placed at the edge of decisive downside breakout of the lower support as well as the range movement of the last one month.
As per the present high low range, a sustainable move below 14150 levels is expected to open a broad based weakness in the market and the potential downside target of the range theory to be watched around 13500 levels.
Conclusion: The lack of strength to sustain the highs continued in the market and the Nifty is now placed at the crucial support juncture of around 14200-14150. The chances of downside breakout seems higher. A decisive below the support is likely to drag Nifty down to 13500 levels in a quick period of time. Any upside bounce from here could find strong resistance around 14370.